Interest payments further down with fiscal discipline

Despite the adverse impact of the ongoing global financial crisis, interest expenses will decline in 2009 thanks to the government's commitment to pursuing a policy of fiscal discipline.

The government has allocated TL 57.5 billion for interest payments this year, or 21.9 percent of the total 2009 budget. Total interest expenses in 2008 are estimated to have accounted for 23.7 percent of the budget.

In 2009 the daily interest payment will be TL 157.5 million while the monthly average interest expense will be TL 4.8 billion. The share of the budget spent on interest was around 50 percent during the 2001 crisis. This rate fell steadily to 40 percent in 2004 and to 31 percent in 2005. Interest expenses were 25.8 percent of the budget in 2006 and 23.9 percent in 2007.

Meanwhile, 7.4 percent of the 2009 budget will go for public investment, a low percentage despite increasing expenditures due to the approaching local elections.

The projected share of public investment declined this year compared to last year, when it amounted to 8.9 percent. The public investment allocation was around 5 percent in 2000 due to increasing interest rates and revenue shortfalls. This grew to 6 percent in 2004, 7.8 percent in 2005 and 8.3 percent in 2006. In 2007 public investment expenditure made up 8.1 percent of the budget, and it is estimated to have been around 8.9 percent in 2008.